Kenya draft requires 30% stablecoin reserves held locally

Kenya’s National Treasury has proposed that any firm issuing stablecoins in or from Kenya keep at least 30% of customer reserves in segregated accounts at commercial banks domiciled in Kenya. The proposal appears in Regulation 74 of the draft Virtual Asset Service Providers Regulations 2026 and is under review by the National Assembly Committee on Delegated Legislation. The Virtual Asset Service Providers Act took effect in November 2025.

Regulation 74 would require the 30% share to remain in segregated Kenyan bank accounts at all times. The remaining 70% of reserves must be held onshore in high-quality liquid assets, defined in the draft as cash, central bank reserve deposits, bank deposits, government securities with maturities of 90 days or less, and short-term repurchase agreements backed by cash or central bank deposits.

Regulation 72 in the same draft separately requires a full 1:1 backing for stablecoins with liquid reserves that are segregated from operating funds and protected from creditor claims.

The draft also sets capital thresholds for licensed stablecoin issuers: a minimum paid-up capital of $3.85 million and KES 100 million in core or liquid capital. The regulations would bar stablecoin issuers from paying interest on coins, including indirectly through other licensed virtual asset businesses.

The Committee on Delegated Legislation has questioned the practical effect of the 30% localization rule and requested further explanations from Treasury officials. Committee members proposed capacity-building exercises and benchmarking visits to jurisdictions with established digital-asset rules. No deadline has been set for finalizing the regulations.

Industry groups raised concerns about applying the 30% requirement to foreign-issued stablecoins. Allan Kakai, director at the Virtual Assets Chamber of Commerce, argued the requirement should concentrate on Kenya-shilling stablecoins and should distinguish local issuers from foreign issuers. Mathare MP Anthony Olouch asked whether the rule would protect Kenyan investors when most reserves for foreign issuers are held overseas. Samuel Chepkonga, chair of the committee, cautioned that rules disconnected from global practice could harm Kenya’s standing as a regional digital-finance hub.

Banks have not confirmed whether they will accept the crypto-related deposits required by the draft or what terms they would impose. Firms and industry groups say the proposal would increase compliance costs, slow transaction processing and affect market entry decisions by foreign stablecoin platforms.

Kenya has about 733,300 people owning digital assets, ranking third in Africa after Nigeria and South Africa. On-chain stablecoin transactions in Africa declined from roughly 657,900 in the first quarter of 2025 to about 391,000 in the first quarter of 2026, a 41% year-on-year drop.

The parliamentary review will determine whether the draft regulations are finalized and whether any changes are made to the reserve localization, capital or operational requirements.